A balance transfer credit card is a novel way of transferring the existing debt to a new card. What’s more, you ask? You can do it for no fee 0 interest! Banks and financial institutions are providing these balance transfer credit cards to existing as well as new customers. The deal is pretty straightforward and advantageous for you on many accounts. However, with any scheme there is a drawback, so you should always read the offer document clearly before going for it.
A balance transfer credit card will allow the user to transfer the debt at 0% interest for a set period. Interest generally charged on all new purchases with all credit cards, and the rates are usually high enough to burn a hole right through your pocket. But now you can transfer the existing debt to the balance transfer credit card and chisel away the incurred debt at no interest rates. Isn’t it just great news? There are associated perks of using such a credit card.
Here, in this article, we will go over the basics of a balance transfer card! If you are unsure about how this works or are looking for a general introduction into balance transfer, read on!
A general introduction
Banking is a competitive sector, and like any other businesses, each institution is trying to ace the other. Your company is valuable to them, and thus they introduced the balance transfer credit card. The truth is it’s a win-win situation, the banks get your business, and you can save a lot of money in the long run. With interest rates, you will always be paying more than you had bargained for while purchasing the item in the first place. The more the debt, the worse is the credit score. As individuals are warming up to the fact that a good credit score is imperative, the popularity of a balance transfer credit card is growing. There are numerous incentives on offer so you should look into the matter genuinely to make an informed judgment call.
The options are numerous with balance transfer credit cards as most of the financial institutions are providing it. There is an array of additional features included in the balance transfer credit cards which include no annual fees, reward points for traveling and lodging, bonus points when you sign up for the first time. You get concierge service along with cash back options and even identity theft protection. You might be happy with your existing credit card set-up but still investing in a balance transfer credit card is always a great idea. Read, review and learn about the additional benefits and do the math on how much interest you will be saving if you switch to such a low annual rate credit card option.
These balance transfer credit cards are one of the most powerful customer retention tools a bank or financial institution possesses. Keep in mind that the banks won’t be going through the initial application processes by themselves and will be protecting against a higher percentage credit risk. Your liability or the value as an asset will be assessed. However, it doesn’t mean if you have a higher debt you are deemed unfit for a balance transfer credit card always since these financial institutions are out to compete with each other. Shop around to search for the perfect institution for your debt transfer credit card.
Why should you sign up?
Well, many individuals suffer from bad spending habits, and thus they feel the need to jump credit cards one after the other. It is essential to milk all the mileage that you can avail from one option. Only after you exhaust one, should you open another! Life and credit cards, both work the same way. The perks that are on offer when you sign up for a balance transfer credit card are listed as follows:
- 12 to 18 months period as a zero interest period from the time you transfer the debt
- 0 annual fees
- Identity and credit card protection at zero cost
- Free credit and score monitoring
- The low-interest rate on new purchases
Every individual card is different, and the perks are included depending on the credit card you choose. So you must read the offer documents carefully to take stock of the situation and how your card fits your bill. The primary benefits, as well as the additional perks, are the things that you should consider carefully before investing. A cash card might be perfect for the house-wife whereas for the jet-setter business person an airline mileage card is the best option. You get the idea right?
Ideally, when should you go for a balance transfer credit card option?
For individuals and customers who want to get the most out of their credit cards, the balance transfer credit cards provide an excellent option. Individuals with good credit score history are an asset to the banks and the financial institutions. Since banks are in direct competition to each other, they are going all out to woo you, the customer. Thus, you get numerous incentives and bonus rewards when you sign up for a balance transfer credit card.
Maintain a good credit score, anything above and at the average mark is enough to avail a balance transfer credit card. At times it can also be provided to someone with low credit score, but the range of 700-800 and above are preferred.
The types of customers
The balance transfer credit cards ideally suit two types of consumers –
The first are the ones who will need a longer time to pay up a certain debt on a purchase or multiple purchases. Let’s take the example of a college graduate. The student will use the credit card to make their way through college. So he will have accrued a certain amount of debt on the credit card. Now after graduation, he can pay off the debt at a lower interest rate or zero percent rates. It will help him maintain a good credit score.
The second types of consumer who can go for this option are the individuals who have some debt and want to maximize the potential of their credit cards. Transfer the debt of a high-interest credit card and maximize your gains if you belong to this category.
Save big with balance transfer credit cards today!
Kelly Wilson is an experienced and skilled Business Consultant and Financial advisor in the USA. She helps clients both personal and professional in long-term wealth building plans. During her spare time, she loves to write on Business, Finance, Marketing, Social Media. She loves to share her knowledge and Experts tips with her readers.